Pre-shipment inspection

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Pre-shipment inspection (also preshipment inspection or PSI) is a part of supply chain management and an important quality control method for checking the quality of goods clients buy from suppliers.

Contents

PSI helps ensure that production complies with the governing specification, contract, or purchase order. A final random inspection (FRI) checks finished products, often when at least 80% of an order has been produced and export-packed. Samples are selected at random, according to standards and procedures.

Process

Re-shipment acceptance sampling, involving inspection, and acceptance testing, may be agreed upon between a buyer, a supplier, and a bank, and it can be used to initiate payment under a letter of credit. A PSI can be performed at different stages before shipment, such as checking the total amount of goods and packing, controlling the quality or consistency of goods, checking of all documentation, as for example test reports, packaging list, or verification of compliance with standards of the destination country like ASME, CE mark and import duties.

Random selection

Defects

There are three levels of defects in a pre-shipment inspection with each defect escalating into the next.

Compliance

The inspection team covers the order and shipment. That is perhaps the most detailed of all the process and is when issues are most likely discovered. This step takes considerable time but importers consider it to be the de facto part of the inspection process.

Functionality

Does the product work in its intended manner, which is important for electronics, toys, and the like.

Safety

UL, CE, BSI, CSA, FDA, etc. Are all parts of a safety check. It is of the best interest of the importer to be sure that all products meet the requirements, particularly for machinery and any product using electricity.

Inspection companies

There are two types of PSI companies:

A higher form of the PSI is called expediting, in which the dates of delivery and the production are included in the control.

Termination on the PSI requirement

PSI increases burdens and costs in international trade and can be counter-productive for the country of importation and its traders.

Several countries are considering termination on the use of inspection companies' service, following upon WTO Agreement on Trade Facilitation Article 10.5 Pre-shipment Inspection : 5.1. Members shall not require the use of pre-shipment inspections in relation to tariff classification and customs valuation.

In 1988, United Nations Economic Commission for Europe, Recommendation No.18 - Recommended Measure 8.2 “Discouragement of Pre-Shipment Inspection” was adopted. This was then adopted in 1999, in UNECE Recommendation No. 27, which "encourages using the WTO instrument regarding pre-shipment inspections (PSI) where such inspections are considered necessary as an interim measure, while discouraging the practice of PSI in general." [3]

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<span class="mw-page-title-main">Customs</span> Government agency which regulates the flow of goods and collects duties

Customs is an authority or agency in a country responsible for collecting tariffs and for controlling the flow of goods, including animals, transports, personal effects, and hazardous items, into and out of a country. Traditionally, customs has been considered as the fiscal subject that charges customs duties and other taxes on import and export. In recent decades, the views on the functions of customs have considerably expanded and now covers three basic issues: taxation, security, and trade facilitation.

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<span class="mw-page-title-main">Inspection</span> Organized examination or formal evaluation exercise

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<span class="mw-page-title-main">MIL-STD-105</span>

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Customs clearance can be conducted at any one of the many customs offices in China. A commercial invoice, packing list and the CIF must be provided for the shipment. It is also important to make sure that all documentation shows the complete country name as “People’s Republic of China.”

References

  1. "ANSI/ASQ Z1.4 & Z1.9 Sampling Plan Standards for Quality Control | ASQ". asq.org. Retrieved 2021-06-04.
  2. "Pre-Shipment Inspection – Keep Quality High And Customers Happy | Sourcing Nova" . Retrieved 2021-06-04.
  3. "Trade Facilitation Recommendations | UNECE". unece.org. Retrieved 2022-06-21.